Nine-month quarterly flash survey results from Citi Private Bank show further evidence of the continued challenges facing the legal industry. Momentum has slowed since the strong start to 2016—when we saw growth in demand of 1.8 percent and growth in revenue of 5.8 percent—resulting in just 0.3 percent growth in demand and 3.7 percent growth in revenue at the nine-month point. These numbers are similar to the modest results we’ve come to expect throughout most of the post-recession years.
Notably, during the third quarter we started to see the impact of associate salary increases on expenses and margins. More important, behind the industry averages we saw the beginning of stratification across the various industry segments, caused by the pressure firms faced to raise associate salaries: First, there is evidence of varied levels of adoption of the new compensation levels, and second, for firms that did move compensation higher, there will be varied effects to profitability.
